Why you should sweat the small stuff
How much are human mistakes impacting your bottom line?
In a Bloomberg BNA survey of the top mistakes made in tax, accounting, and financial reporting, errors stemming from manually entered data topped the list for 28% of respondents.
The specter of regulations puts a huge burden on companies to get things right. Even a small mistake could lead to a big fine to your company. Your reputation matters.
Remember what happened on Wall Street in 2010? A single mistyped letter—"B" for billion rather than "M" for million—appeared to trigger a "flash crash" that momentarily cost investors $1.1 trillion. And yes, that's "T" for trillion.
From sloppiness to confusion to simple lack of skill, human error will always be a factor. It's estimated that 20% to 40% of all spreadsheets contain errors, and nearly 90% of all spreadsheets with more than 150 rows contain errors. But mistakes don't have to have such a profound impact on your business.
There are controls your company can use to cut down on errors in your financial statements and internal controls framework:
#1: Stop, collaborate, and listen
Manual data entry isn't the only issue when it comes to mistakes in financial reports. The tools we use are a problem too. Version control issues continue to plague financial reporting teams with antiquated systems.
When a document is emailed out to five different people, it creates five different versions. Then someone makes a change. The spreadsheet is emailed around again. The headaches? They only multiply.
After analyzing over 15,000 spreadsheets sent through 600,000 emails at Enron, Dr. Felienne Hermans said that "some people were sending more than 100 spreadsheets back and forth on a daily basis, which proves there was no agreed system or standardized way of working."
You need a single environment where all your collaboration and work can live.
#2: Enhance accountability
New, collaborative technology can standardize your process. There are solutions that allow your team to collaborate in real time, work on the same documents and data, and view a complete audit trail of all documents and data.
Keep your team and data accountable with a solution that alerts you when numbers aren't matching up, shows who made the changes, and tracks and when and where they occurred.
Automating the evidence request through a secure platform reduces the risk of confidential data being emailed out to the wrong person or intercepted through insecure channels.
#3: Connect the dots
There are countless times where numbers repeat between financial statements, SOX and internal controls documentation, evidence, dashboards, and the risk control matrix. Lower your business risk with a collaborative technology that dramatically bolsters the accountability of your team and your data.
The right technology is out there.
A recent report from The Economist Intelligence Unit reports that 52% of CFOs see data accuracy as the biggest obstacle in their jobs.
Accurate data, in real time, can allow them to do their jobs and guide their businesses to achieve the desired objectives.
Invest in high-quality software that can help to mitigate risk of human error, provide accurate data, and can be utilized as a tool for all levels of the organization.
By putting these three controls in place, your team will be in a better position to avoid human error. Sometimes mistakes are unavoidable, but it's important to reduce your risk.